U.S. tariffs may hit Japan's auto, capital goods, and machinery sectors the hardest. Japan's trade surplus with the U.S., at US$72 billion in 2024, is the second largest in Asia-Pacific behind only China (see chart 1). The country's exports to the U.S., however, amounts to only 3.7% of its GDP. While this implies lower direct exposure than the regional average of 6.3%, indirect effects could hit Japan's sizable export sector, which is as large as a sixth of its economy.